Romania’s 2018 Euro Bonds Extend Longest Rally in Six Months

By Andra Timu and Irina Savu -
Oct 12, 2012

Romania’s euro-denominated bond due
2018 gained for a 10th day, the longest rally since March, as
higher yields relative to other government securities in the
region make the country’s debt more attractive.

Yields on euro-denominated bonds due in 2018 fell 23 basis
points to 4.096 percent, the lowest on record, bringing the
slide this week to 55 basis points. The yield is still higher
than Poland’s 1.899 percent for Poland’s 2018 euro-denominated
debt and 3.342 percent for Turkish notes due in 2019.

Political turmoil has eased after the country’s
Constitutional Court invalidated an impeachment vote on
President Traian Basescu due to low vote turnout in August. The
cost of insuring against a Romanian default for five years using
credit-default swaps fell 45 basis points to 236, the lowest in
more than a year, according to data compiled by Bloomberg.

“Romania has benefited from strong demand for central and
eastern European credit,” Andreas Kolbe, a London-based
strategist at Barclays Plc, said in an e-mail. “Risks in
Romania have become a bit less intense recently. We expect the
positive momentum to continue for now.”

The leu gained less than 0.1 percent to 4.5700 per euro by
5:10 p.m. in Bucharest, strengthening for a third day.

Romania may exceed its 2.5 billion-euro ($3.2 billion)
international borrowing plan this year, Deputy Finance Minister
Enache Jiru said on Oct. 8. It raised 750 million euros from a
sale of 2018 Eurobonds at a yield of 5.1 percent on Sept. 4. It
has also borrowed $2.25 billion via dollar-denominated bonds
this year.